Europe's Critical Materials Gamble: Can the EU Secure Its Own Supply?

The EU has set ambitious targets for mining, processing, and recycling strategic raw materials. But a recent audit reveals that financial, legal, and administrative bottlenecks are slowing progress — while the US and China race ahead.

Europe has a problem it cannot ignore: its aspiration to lead the global green and digital transitions depends almost entirely on others for the raw materials those transitions require. Lithium for batteries, rare earths for wind turbines and electric motors, gallium for semiconductors, cobalt for energy storage — for nearly all of these, Europe relies on imports, often from a single dominant supplier: China.

At the time the Critical Raw Materials Act was conceived, the EU depended on China for 98 percent of its rare earth supply, 97 percent of its lithium, and 93 percent of its magnesium. That level of strategic vulnerability — in materials essential for defence, energy, and digital infrastructure — is what the EU set out to fix. But almost two years after the Act entered into force, the question remains: is Europe moving fast enough?

The Critical Raw Materials Act: What It Promises

The Critical Raw Materials Act (CRMA), which entered into force in May 2024, is the most comprehensive attempt made by EU to secure its mineral supply chains. It identifies 34 critical raw materials and 17 strategic raw materials — a subset deemed essential for clean energy, digital, defence, and space technologies.

The Act sets four benchmarks to be achieved by 2030: at least 10 percent of the EU's annual consumption of strategic raw materials should be extracted domestically; 40 percent should be processed within EU borders; 25 percent should come from recycling; and no more than 65 percent of any single strategic material should be sourced from one non-EU country at any stage of processing.

These are ambitious but non-binding targets — a distinction that matters when it comes to implementation.

The Audit: A Reality Check

In early 2026, the European Court of Auditors published a special report assessing whether EU-level actions are ensuring a long-term secure supply of critical raw materials for the energy transition (ECA Special Report 04/2026).

The auditors found that financial, legal, and administrative bottlenecks are hampering progress across the board. Exploration of deposits within the EU remains underdeveloped. Targeted mineral exploration — the process of determining whether specific sites contain commercially viable resources — is described as a high-risk endeavour with low success rates. The investment required is substantial, and the regulatory framework in many member states was not designed to support rapid development of mining projects.

The report also found that while the European Commission has used programmes like Horizon Europe and the European Regional Development Fund to support critical materials projects, it cannot demonstrate the actual impact of this funding on supply security.

Perhaps most critically, the auditors examined the EU's network of strategic partnerships with resource-rich countries and found that only six of the partnership roadmaps include concrete implementation deadlines. The Commission monitors whether planned actions are being carried out, but does not assess their effect on actual supply.

RESourceEU

Recognising the urgency, the European Commission launched the RESourceEU Action Plan in December 2025, alongside a proposed amendment to the CRMA. The plan aims to accelerate progress toward the Act's objectives through several mechanisms: a joint purchasing and strategic stockpiling centre for critical raw materials, enhanced funding for circular economy initiatives, and strengthened market monitoring.

Under RESourceEU, the EU will create a centralised body to purchase and stockpile strategic materials on behalf of member states — a model inspired by the bloc's collective purchasing of gas during the energy crisis and vaccines during the pandemic.

The Commission has also allocated significant research funding. Under the 2026-2027 Horizon Europe work programme, approximately €593 million will be directed toward optimising resource use in a circular economy and new production processes.

In parallel, the first round of strategic project selection was completed in March 2025, with 47 projects approved for streamlined permitting and preferred access to finance. A second selection round is underway.

The Scale Problem

But there is a fundamental mismatch between EU ambitions and EU resources. The US Export-Import Bank alone announced in late 2025 that it intends to invest $100 billion in critical raw materials and energy — a figure that puts the €3 billion allocated to RESourceEU into sharp perspective. China has been building its dominance in this sector for over three decades, with massive state investment in both domestic processing capacity and overseas mining operations from Congo to Indonesia to Chile.

Europe's challenge is not just financial. Public opposition to mining remains strong in many member states, rooted in legitimate environmental concerns but creating a political barrier that neither Brussels nor national capitals have fully resolved. The CRMA attempts to streamline permitting for strategic projects, but the tension between faster approvals and environmental protection standards has not disappeared.

There is also a workforce problem. Europe largely dismantled its mining expertise over the past half-century as extraction moved to countries with lower costs and less stringent regulations. Rebuilding that expertise — from geologists to mining engineers to processing specialists — will take years.

China's Counter-Move

Beijing has not been passive while Europe tries to diversify. In 2023 and 2024, China imposed export restrictions on gallium, germanium, and antimony — materials critical for semiconductor manufacturing and defence applications. These restrictions served as a pointed reminder of how quickly supply chains can be disrupted when a dominant supplier decides to use its position as leverage.

China controls approximately 60 to 90 percent of global processing capacity for most critical minerals, depending on the element. Even when raw materials are mined elsewhere — in Australia, Congo, or Chile — they are overwhelmingly shipped to China for refining before entering global supply chains.

Breaking this processing bottleneck is arguably Europe's most important and most difficult task. Extraction without processing capacity simply shifts dependency from one stage of the supply chain to another.

The Geopolitical Context

The critical materials challenge does not exist in isolation. It is embedded in the broader Tech Cold War, where access to strategic resources is increasingly treated as a matter of national security rather than free trade.

The United States has moved actively to secure its own supply chains through the Inflation Reduction Act, Defence Production Act invocations, and direct government financing. Washington's approach combines domestic subsidies with bilateral deals — notably with Canada, Australia, and select African nations.

For Europe, the strategic calculation is more complex. The EU must simultaneously maintain trade relationships with China (its largest trading partner for goods), build new partnerships with resource-rich nations, develop domestic capacity, and do all of this while upholding environmental and social governance standards that its competitors do not always share.

What Comes Next

The European Commission is expected to publish its first implementation report on the CRMA in 2026, providing a formal assessment of progress toward the 2030 targets. Early indications suggest that while institutional frameworks are being built, the physical supply chain — mines, refineries, recycling plants — is moving far slower than the regulations that govern it.

The fundamental question is whether Europe can translate policy ambition into industrial reality before its dependencies become acute vulnerabilities. Demand for critical materials is growing exponentially: EU lithium demand is projected to increase twelvefold by 2030 and twentyfold by 2050. Rare earth demand is expected to grow sixfold by 2030.

The clock is ticking. Europe's critical materials gamble is not about whether the right policies exist on paper. It is about whether mines can be opened, refineries built, and supply chains secured before the technologies they support become unaffordable — or unavailable.

This is part of Tech Cold War's coverage of the critical materials battleground. Subscribe to receive weekly analysis on the technologies and resources reshaping global power.